Dear PAO,

My friend and I purchased a 300-square-meter (sqm) lot. Based on our agreement, we will divide the property equally; she will be entitled to 150 sqm, and I will be entitled to the other 150 sqm. Before the partition, she asked for permission to begin the construction of her house on our co-owned lot, which I granted. When we finally decided to partition the lot, we discovered that her house encroached on my part of the lot. My friend strongly insisted that she should only pay me the value of the specific portion of the lot because she did not know of the encroachment. What are the options or remedies available to me as co-owner of the lot? Can my friend insist on purchasing the encroached portion of my land?

Katrin

Dear Katrin,

There are several remedies provided by law to landowners, in case there is an encroachment on their property. Art. 448 of the New Civil Code provides that:

“ARTICLE 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.”

Before discussing the available remedies, it is crucial to determine if the provision of law applies. The remedies provided under Art. 448 of the New Civil Code is applicable when someone builds, sows, or plants in good faith, on another’s land. Hence, it is important to determine whether or not the builder could be considered as a builder in good faith.

Based on the case of Heirs of the Late Joaquin Limense, namely: Concesa Limense, Surviving Spouse; and Danilo and Joselito, both surnamed Limense, children, v. Rita Vda. de Ramos, Restituto Ramos, Virgilio Diaz, Ireneo Ramos, Benjamin Ramos, Waldytrudes Ramos-Basilio, Trinidad Ramos-Bravo, Paz Ramos-Pascua, Felicisima Ramos-Reyes, and Jacinta Ramos (GR 152319, Oct. 28, 2009, Ponente: Then associate justice who later became Chief Justice Diosdado Peralta):

“The essence of good faith lies in an honest belief in the validity of one’s right, ignorance of a superior claim, and absence of intention to overreach another. Applied to possession, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it.”

Therefore, a builder could be considered in good faith if he/she builds on a specific property with the honest belief that he/she is the owner of the said property. However, if a person knows that he/she is not the owner of the property, then he would be considered as a builder in bad faith.

The Supreme Court, in the same case, ruled that “when the co-ownership is terminated by a partition, and it appears that the house of an erstwhile co-owner has encroached upon a portion pertaining to another co-owner, but the encroachment was in good faith, then the provisions of Article 448 should apply to determine the respective rights of the parties.”

Regarding remedies, Art. 448 of the New Civil Code provides that the owner of the land may choose to appropriate the improvements made on their property by paying the necessary and useful expenses incurred by the builder in good faith. Alternatively, the landowner may demand that the builder in good faith pays for the value of the land, provided that the value of the land is not considerably higher than what is built thereon. However, if the value of the land is significantly higher than the value of the improvements, the landowner may opt for reasonable rent instead.

Applying the foregoing to your situation, your friend may be considered a builder in good faith, absent any indication that she was aware that she was already encroaching on your land when she built her house. As such, as the owner of the encroached land, you may choose between these two options. You may appropriate the improvements on your land after compensating your friend for the useful and necessary expenses incurred. If you prefer not to appropriate the improvement, you may demand payment for the value of the land or reasonable rent, depending on the comparative values involved.

It should be noted that the right to choose the legal remedy belongs to the landowner and not to the builder in good faith. Thus, your friend cannot insist on purchasing the encroached portion of your land, because this option rests solely with you as the owner.

We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected]